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DomainTools CEO Tim Chen – DNW Podcast #82

The domain name investing community was up in arms last week after DomainTools announced big changes to its subscription plans by raising prices and limiting searches. On this week’s episode, DomainTools CEO Tim Chen explains the evolution of the company and why it made this move, and what this means for domain investors. Among other things, Chen explains how DomainTools determined account limits and how the company is reinvesting in more tools.

Also: Verisign news, MMX update, GoDaddy’s patents, .brands and more.

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Comments

I feel that parts of this podcast were very misleading. They make it sound like the only people who are complaining are people on “$8 and $12 plans” who were getting unlimited lookups and have had their plans for a super long time.

I started paying for my account in 2014 and was paying the $49.95 per month they asked. I didn’t daisy chain multiple pro accounts together and I didn’t do any of the things that Tim Chen used as excuses for why they did this. The fact is he is giving a huge middle finger to small businesses like mine by saying he doesn’t care about us and that enterprise is their focus. He said in the podcast that he “feels bad” about this, but I don’t believe him at all.

This is purely a money grab by Domain Tools. Why else would he say “One of the reasons we didn’t do this earlier” was that there wasn’t good competition that their customers move to. Who says that?

I’m not sure why Tim even wasted the time to do this interview as all it did was solidify the points that everyone has been making and solidifed the fact that they just totally crapped on a huge segment of their most loyal customer base. They looked at the bell curves to figure out how they could keep a majority of their users on the membership plan and anyone else they just kicked to the curb without a care in the world.

You could fix this very easily by raising the price to your $99/month and leaving the limits in place. You could even get rid of the people on unlimited lookups and move them to 100 whois history per month. You won’t do that though b/c that isn’t what this is about. Let’s be honest, giving someone 100 historic whois lookups vs 25 per month doesn’t hurt your bottom line as they are simply database queries.

their new focus are more willing to pay more for less, is what i got from Tim basically. i can see getting rid of the legacy pricing and streamlining what people get but its too bad they couldn’t offer a domainer package and charge 40 bucks a month to everyone and offer what is most important to domainers. in my case its whois (200/day is low) and whois history (25 a month is nothing) and the domain monitoring. 1000 is ok but 5000 is better. bottom line, domainers aren’t important customers any more and they assume whatever domainer customers they lose they will more than make up for in companies willing to pay a lot more for the data.

What can we say what’s done is done, many of use have found a cheaper and better option now. DomainIQ is a little short on how far back history goes but offers many more tools Tim Chen wants extra for and do it for $49.

Domaintools purged the domainers and for a reason perhaps. What they charge for is already either free elsewhere, cheaper or wasn’t potentially legally theirs to collect and sale any ways. You would think bringing attention to themselves is the last thing they’d want.

They know whois history is one of the most used tools but chose to limit it out at 25 searches. This leaves it open to charge the enterprise price for the larger players that can afford it and they’ll still probably make more with those few accounts than letting all the others in cheap.

This may all be a good money making decision for the company but still for some reason leaves me feeling they have some ill will towards domainers.

They harvested and stored whois data back when others wouldn’t as it was said to be against the rules to do so. I guess rules or not, they were smart for doing so.

It’s obviously not a way to make people feel better because everyone who is complaining are the people who fall into the right side of the bell curve that Tim references and he essentially says “We don’t care about those people”

Yet another flirt piece with a vendor. At least it wasn’t peddling unwanted new TLDs this time. The news section is very handy but Andrew, you should apply some critical and editorial rigor to the interviews or else just ask your guests to read their latest press releases. You’ve lost another subscriber.

I think that what was more annoying than the price increase was to learn that Domaintools’ “Heavy users” were paying legacy prices of $8 to $12/month and running “100,000 domain monitors.” is not the reason for the price change. That’s poor business and you can tell that the enterprise pricing also probably varies by customer because you can’t even get the CEO to quote the price.

If you listen carefully to Chen, you’ll understand that something more than legacy price adjustment has taken place. Domaintools has shifted from a “retail” subscription service to a corporate vendor. This makes sense for Domaintools from a financial and operational perspective. The price jump reduces server demands by reducing the user base, i.e. less queries by minute, less monitors, etc. That’s a huge expense that he referenced (bandwidth and mapping). And, by transitioning from a retail store to a corporate vendor, Domaintools can charge substantially more and maintain the same small support force of 43 employees.

I agree that daisy-chaining $50 Professional accounts together was not a true problem, as claimed by Chen, and the quotas for the new Plans show that. The new “retail” $99 plan is capped at 25 Whois History queries per month. If you need more than 25 queries, you’ll need to buy the annual Enterprise subscription which comes with 10,000 Whois History queries. A lot of corporate accounts are never going to come close to 10,000 queries per month and a huge number of small & medium sized businesses will need more than 25 queries. Domaintools has chosen to gouge the budgets of the Fortune 500 firms that won’t flinch at a $10,000 subscription for their cyber security budget right now. One corporate account is equivalent to 10,000 retail accounts in revenue, but the demands on the servers are thousands less.

The users who daisy-chained accounts together or bought extra credits for Whois History queries didn’t cheat Domaintools. They paid the same flat price per query. Domaintools, on the other hand, is making Enterprise accounts commit to annual subscriptions priced for tens of thousands of queries – that’s thousands of queries that they’ll never use, but accounting departments will never question.

Finally, Chen said he didn’t raise the legacy prices sooner because he didn’t think there were good alternatives out there (for his ousted subscribers to go to). Anyone who took a business class raised their brows to that comment. It implies scarcity and when a product is scarce, the prices don’t stay unsustainably low. The market drives the price up. Compared to the new competitors like Domainiq, the deep Whois database of Domaintools will remain a scarce commodity.

Yes, but why would you. There is no incentive because the cost per query is still the barrier.

Some large corporations might be able to daisy-chain accounts, but small, medium and some large business won’t add $350 to $800/month to their overhead to retain the same level of service. This is a phase out of retail (subscriptions) in favor of corporate vendor contracting.

I guess I am in the minority here, but sounds fairly reasonable to me. High costs due to product complexity related managing lots of variations in legacy accounts accumulated over 15 years to support customers who don’t pay very much. Plus more attractive, higher paying market segments elsewhere. If it were your own business, how many people would seriously accept higher costs and lower revenues indefinitely?